December 6, 2022

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Dow closes below 30,000 as post-Fed rally reversals

Dow closes below 30,000 as post-Fed rally reversals

US stocks fell sharply on Thursday, sending the Dow Jones Industrial Average down below 30,000 for the first time since January 2021 with volatility. continued to shake the market.

Major indices recorded significant declines in 2022 with rising inflation, high interest rates Rising concerns about corporate earnings and economic growth have also dampened investors’ appetite for risk. Blue chips are down 18% this year, the S&P 500 is down 23% and the heavy Nasdaq Composite is down 32%.

Stores crowd Wednesday After Federal Reserve Chairman Jerome Powell indicated that the central bank will continue to raise interest rates, he indicated that the range of Wednesday’s increase will likely not become popular. Thursday This optimism is goneStocks fell across the market as investors reassessed the risks ahead.

“The outlook for growth, earnings and inflation, at least for the next few months, is not quite that favourable, unfortunately,” said Michael Sheldon, chief investment officer at investment advisory firm RDM Financial Group.

The Standard & Poor’s 500 Index fell 123.22 points, or 3.3 percent, to 3,666.77 points. The Dow Jones Industrial Average fell 741.46 points, or 2.4%, to 29,927.07. Both indices ended at their lowest closing levels since December 2020.

The Nasdaq Composite Index fell 453.06 points, or 4.1%, to 10,646.10, its lowest close since September 2020.

The decline in the average blue-chip stocks can affect the mood of investors, who in recent years have become accustomed to stocks that seem to be going higher than ever.

said Carol Schleif, Vice President of Investments at BMO Family Office Inc.

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The Fed’s rate increase of 0.75 percentage points was Bigger since 1994 But it is in line with investor expectations as the central bank races to tame high inflation. The latest data showed consumer price inflation in May Reached its highest level In more than four decades.

Mr. Powell said That while the central bank is not trying to cause a recession, it is becoming more and more difficult to achieve The so-called soft landing, where the economy slows enough to curb inflation without entering a recession. Some analysts said investors are coming to terms with it Increased risks to economic growth.

I think that’s the realization that we could really head into a recession. “I’m not sure this has penetrated the mind of the market yet,” said Altaf Kassam, head of investment strategy for EMEA at State Street Global Advisors.

Federal Reserve Chairman Jerome Powell said the central bank’s goal is to bring inflation down to 2%. The Federal Reserve approved a 0.75 percentage point interest rate increase on Wednesday, the largest rate increase since 1994. Photo: Elizabeth Frantz/Reuters

Shares tumbled across the board Thursday, with each of the S&P 500’s 11 sectors down on the day. The Energy group, the only sector in the positive territory for 2022, recorded a decrease of 5.6%.

Big tech stocks fell, with Microsoft Shares fell 2.7%, Amazon Shares fell 3.7% and nvidia Share prices fell 5.6%.

Twitter Shares lost 63 cents, or 1.7 percent, to $37.36 after that Tesla chief executive officer Elon Musk Address Twitter employees At a company meeting Thursday on topics including whether there will be layoffs if he completes the planned acquisition of the social media company.

TeslaAnd the

that Raising the prices of some of its cars Amid rising costs, it fell $59.70, or 8.5%, to $639.30.

While Mr. Powell suggested on Wednesday that an “unusually large” rate hike would not become popular, he left the door open for another 0.75 percentage point increase as soon as next month.

Ovin Devitt, chief investment officer at Moneta, said interest rate increases of this magnitude could upset investors if they feel the Fed is racing too quickly to outpace inflation. “This could lead to more market anxiety,” she said.

The Swiss central bank surprised investors by raising interest rates for the first time in 15 years. The Swiss National Bank raised its policy rate by 0.5 percentage point to minus 0.25%, leaving only

Bank of Japan

One of the major central banks in the advanced economy is not raising interest rates to tame inflation. Economists had expected the Swiss National Bank to leave interest rates unchanged.

“This is the last hurdle to fall,” said Sima Shah, chief strategist at Principal Global Investors. “If we’re getting central banks deemed perpetually pessimistic about raising interest rates, there’s no denying that there’s a huge inflation problem in the global economy.”

Bank of England on Thursday Raised the key interest rate As expected to 1.25% from 1%, marking its fifth step in the largest number of meetings, he said that larger moves may be needed to tame inflation.

weekly Unemployment Claims Data It showed that 229,000 Americans applied for unemployment benefits in the week ending June 11. The labor market has been a strength area for the economy, but Federal Reserve officials point to weak employment numbers It may be a necessary consequence Central bank efforts to control inflation.

Return on a 10-year benchmark US Treasury Department The note fell to 3.303% from 3.389% on Wednesday. Treasury yields, which move in the opposite direction to prices, help set prices on a variety of consumer products including mortgages and auto loans.

Bitcoin refused to The tenth day in a rowIt is down 4.6% from the 5pm ET level on Wednesday to trade at $2,682.61. Cryptocurrencies have been exposed to widespread economic concerns harming risky trades, concerns about selected projects and Companies in the crypto ecosystem. Investors in crypto lender Celsius are unlikely to provide the company with more funding that could save the company, The Wall Street Journal reported Thursday.

In the commodity markets, Brent crude, the international oil standard, rose 1.1% to $119.81 a barrel. Gold prices rose 1.7%.

Overseas stocks fell. The pan-continental Stoxx Europe 600 was down 2.5%. In Asia , Hang Seng In Hong Kong, it fell 2.2%, while Japan’s Nikkei 225 added 0.4%.

Stocks on Wall Street fell after a rally on Wednesday following the Federal Reserve’s interest rate decision.


picture:

Justin Lin/Shutterstock

Write to Karen Langley at [email protected] and Will Horner at [email protected]

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